Major Climate Finance Issues during the final week of the Paris Climate Conference (COP21)
âThe negotiations are ramping up as chief negotiators from each country arrive in Paris. They are taking over for the next week to try and resolve the toughest issues in the draft text. One of the major questions for all stakeholders will be climate finance.
This issue is important to countries that are trying to build low carbon economies - by skipping over a dirty energy path, and for vulnerable communities that need funding to adapt to climate change. Getting finance right in the agreement could help to mobilize significantly more resources for adaptation, clean energy deployment, deforestation reductions, and other efforts.
As a result, a major issue in the final days of Paris will be finance. Developed countries and other countries that have provided climate finance in the past must provide additional information about how much finance will be available after 2020. And we must find a way to "shift the trillions" that could be mobilized if we send the right signals in the agreement.
The final agreement really comes down to a few key finance elements.
Amount of Post-2020 climate finance
What is needed in Paris is a finance package that shows to the developing countries that developed countries are taking the finance issue seriously. There are many developing countries that could significantly benefit from finance in order to unleash low-carbon growth and climate resilience. A number of countries outlined that they could significantly cut emissions beyond their pledges if they were provided with support. Given that we need additional emissions reductions well before 2030 it is essential that we mobilize finance to "unlock" these extra emissions reductions. Finance is also essential since we know that the impacts of climate change are real and being felt by communities that have contributed the least to this problem. These vulnerable communities need support to help avoid the worst impacts of climate change from further devastating their people and livelihoods.
Leaders must be able to show after this week that some measure of additional support will be provided for both efforts. There has been a strong push for language in the negotiating text that refers to the $100 billion in 2020 as the "floor", with higher climate financing mobilized in the years after 2020 "ramping up".
Cycles for Review and Commitments
Most countries aren't calling for a new specific finance commitment (along the lines of the $100 billion target by 2020) but they are calling for a way to ensure that we are continually ramping-up climate finance to assist the poorest countries. That is why some countries are pushing for regular review cycles on climate finance as a requirement in the Agreement, perhaps on a 2 year or 5 year cycle. This could include a look forward at future finance that will be mobilized through public and private channels for climate change. For many developed countries it is difficult to quantify a financial commitment to developing countries for future years, due in part to the diverse budget processes and political circumstances in each country. But is critical that countries detail their updated financial support on a regular basis.
Broadening the donor base
In the text, there are several mentions of climate finance coming from all countries "in a position to do so." This language has been viewed by some groups as an attempt for developed countries to shirk responsibilities and obligate larger and wealthier developing nations to make financial commitments. The countries that support this language argue that such language allows for countries to decide for themselves if they are able to provide financing, broadening the sources of climate finance without diluting the responsibilities of developed nations.
How this gets resolved in the agreement is shaping up to be an important issue which will need resolution without crossing anyone's red lines.
Mobilizing More Support for Adaptation
The countries that have contributed the least to the problem of climate change are likely to suffer the greatest impacts. That is another reason that we need to ensure significant emissions reductions from all major emitters as failure to take bold action will lead to even greater damages on the communities that have contributed the least to climate pollution. We also know that we need to ensure that more resources are provided to assist the most vulnerable in adapting to the impacts of climate change to help minimize the damages. That is why some countries are pushing for greater funding for adaptation over time as the majority of funding has been mobilized towards efforts to reduce emissions. Countries will need to provide greater assurance that more resources will be dedicated to adaptation by reflecting the need to move over time to a 50-50 split between adaptation and mitigation efforts.
Shifting the Trillions
A major objective of the Paris climate conference should be to "mobilize" or "facilitate the mobilization" of climate finance. Both phrases are currently in the text, and show that the agreement is not only about finance from developed countries to developing countries, but also about shifting the flow of investments across entire economies all over the world. Bilateral assistance and the Green Climate Fund are important ways to shift investments, but they are not the full scope of finance needed. There are literally trillions of dollars that can be mobilized to help spur low carbon and climate resilient economies if we get the right signals and infrastructure in place.
The draft text includes language on reducing "maladaptive" and "high emissions" investments. Both phrases are important as they signify a global commitment to slowing public investments in fossil fuels. Obviously this text is not supported by all parties. It would send an important signal to entrepreneurs, businesses, investors and governments to say that we are now willing to shift some of the trillions invested in fossil fuels to investments for a low carbon world - such as investments in clean energy and resilience.
It remains to be seen how these issues can be resolved in this next week, but in terms of climate finance, these will be some of the most hotly-debated areas and where some room for compromise can be found. Without addressing this issue here in Paris it is hard to believe that we can achieve the kind of robust agreement necessary to put us on a safer climate trajectory.